4. Consider a three-player bargaining, where the players are negotiating over a surplus of one unit of utility. The game begins with player 1 proposing a three-way split of the surplus. Then player 2 must decide whether to accept the proposal or to substitute for player 1's proposal his own alternative proposal. Finally, player 3 must decide whether to accept or reject current proposal (it is player 1's if player 2 accepts or player 2's if player 2 offer a new one). If he accepts, then the players obtain the specified shares of the surplus. If player 3 rejects, then the players each get 0. (a) Draw the extensive form game of this perfect-information game. (b) Determine the subgame perfect NE.
Q: You live in a town with 300 adults and 200 children, and you are thinking about putting on a play to…
A: Since you have posted a question with multiple subparts, we will solve the first three subparts for…
Q: Consider an agent that makes long-run and short-run commitment concerning owning a house and a car.…
A: Demand elasticity measures how sensitive a good's quantity desired is to variations in its price. It…
Q: Imagine that firm X chooses their quantity first, then firm Y observes the quantity of firm X and…
A: In economics, the game of Stackelberg, two players with the leading and trailing firms function in…
Q: True or False: The government securities purchased by the Federal Reserve ("the Fed") in normal…
A: Open-market operations and quantitative easing are two key tools used by central banks, such as the…
Q: Imagine you are a manager at Power Boost Waters. Your company is known for producing bottled water…
A: Marginal cost is a fundamental concept in economics that represents the additional cost incurred by…
Q: "Intel CEO Pat Gelsinger is putting the pressure on the U.S. government to help subsidize chip…
A: The concepts of increase in demand and supply of a good are fundamental in economics and are often…
Q: Macmillan Learning (Table: Total Cost and Total Individual Benefit Received from Sanitation Workers)…
A: The social benefits arise when a product or service causes a positive effect on society as a whole…
Q: Which of the following statements are true? Choose one or more: DA They will borrow between the ages…
A: Income is the money that an individual or business receives in exchange for providing a good or…
Q: Widget is a commodity that is traded in a perfectly competitive global market that consists of many…
A: Equilibrium price and quantity:Price and quantity are in equilibrium at the point in the demand…
Q: (Figure: Market Demand Curve I) The graph shows the market demand curve. Price (S) 40- 36 32 28 24…
A: A market structure known as a Cournot duopoly with identical products occurs when two enterprises…
Q: What ethical issues could an online venture that sells Houdoran coffee beans address, encounter, or…
A: The objective of the question is to identify and discuss the potential ethical issues that an online…
Q: what happens is the central bank decreases the money supply?
A: Central Bank adopts monetary policy. Monetary policy is a supply-side policy that is undertaken to…
Q: You are in the business school, so here is a business problem. You can import and export goods from…
A: Purchasing Power Parity (PPP) is an economic theory and exchange rate regime that relates the…
Q: Price Level Long-run AS Y, Y, Short-run AS AD Quantity of Real Output Suppose the economy is…
A: A recession is a temporary period of economic slowdown, generally defined as a fall in GDP over two…
Q: 5. Calculating tax incidence Suppose that the local government of Ogden decides to institute a tax…
A: An excise tax is applied on each unit of a commodity. As a result buyers have to pay higher prices…
Q: for the below table, can you provide the supply function and list out the different variables and…
A: First, we will start by defining a supply function based on the given information. The supply…
Q: 1. The opportunity cost of holding money Suppose you've just inherited $5,000 from a relative.…
A: This can be described as a concept that is related to the cost of holding the money (or cash) is the…
Q: Suppose the UK has 50 hours of labor available, and the US has 100 hours of labor available. Each…
A: When resources are limited, allocative efficiency describes the best way to divide up existing…
Q: - if P2 is of type 1: a1 a2 - if P2 is of type D: as a2 b₁ 2,1 0,0 b₁ 2,0 0,1 b₂ 0,0 1,2 b₂ 0,2 1,0
A: The Nash equilibrium is a decision-making theorem within game theory that states a player can…
Q: The graph shows a long-run aggregate supply curve and a short-run aggregate supply curve. Draw an…
A: The graph in the picture you provided displays a long-run aggregate supply curve (LAS) and a…
Q: What is the cross-rate implied by the following quotes? a. C$/$ = 1.5613, $/€ =1.0008 b. ¥/$ =…
A: The rate of exchange between two currencies without including the home currency is represented as a…
Q: b. If the market is price falls to $7, find the quantity a profit maximizing firm would choose to…
A: Perfect competition is the market consisting of a large number of buyers and sellers. In this market…
Q: Please answer all parts of the questions below. Please provide clear, and complete answers. Show…
A: Budget Constraint refers to the equation that represents the relation between the price of the…
Q: K A tariff is O A. any non- subsidy used to increase trade. B. a subsidy granted to imports. OC. a…
A: Taxation is the cycle by which a government or other taxing power powers a financial charge or duty…
Q: The following graph plots the short-run Phillips curve for a hypothetical economy. The given point…
A: The Philips curve draws in the relationship between inflation and unemployment. Whenever the economy…
Q: Stealth bank has deposits of $700 million. It holds reserves of $10 million and has purchased…
A: The balance sheet of a bank consists of two sections (1) assets and (2) liabilities.A bank's assets…
Q: If Jeff and Mimi choose actions simultaneously, what are the pure-ar mixed-strategy Nash equilibra?…
A: In a Nash equilibrium, each player’s strategy is optimal given the choices of the others. It…
Q: You are advising a small country on whether to print its own money or to use the money of its larger…
A: Currency alludes to an arrangement of money that is utilized as a medium of exchange for goods and…
Q: A pure monopoly occurs when Question 4 options: All firms sell homogeneous goods. Entry barriers…
A: A pure monopoly represents a scenario where a single entity dominates the entire market for a…
Q: Which of the following is not a characteristic of a perfectly competitive market. One firm's product…
A: Perfect competition is a type of market structure in which there are large number of buyers and…
Q: [Adverse Selection] Two firms, Gord and FM, sell cars. Suppose 50% of the new cars in the market are…
A: Adverse selection is described as the information asymmetry in the market. Sellers and buyers do not…
Q: intomational Finance Our 9 3304 Suppose the cost of a car produced in the United States is $17,000.…
A: The movement of currency from one country to another country through exchange is called the exchange…
Q: According to the memo, which of the follow are reasons that many large tech firms actually charge…
A: Monopoly refers to the type of market where there exists a single seller and many buyers. Thus a…
Q: Suppose there were an increase in Government spending of $100 billion. The MPC is 75 andthe tax rate…
A: Crowding out is a concept in economics where the government of a country tends to increase their…
Q: Consider the fish market where demand is given by the following equation: P=52-Q where P is the…
A: In economics, the market is a place where two or more parties meet to have an economic transaction,…
Q: The graph shows the unregulated market for electricity. The marginal external cost of the pollution…
A: The government controls the internal market situation by putting restrictions on the raw materials…
Q: Macmilian Learning e. If money demand does not depend on income, the LM curve is horizontal. True…
A: The LM curve represents the relationship between interest rates and income levels that lead to…
Q: A bank has an average balance of transactions accounts, August 10 to 23, of $824.46 million. The…
A: Desired bank reserves are the amount of reserves that the banks hold with themselves in order to…
Q: 3. Show the impact of the Fed's sale of government securities on the economy using the followin…
A: A model used in macroeconomics is the (AD/AS) model. It clarifies how an economy's price level and…
Q: Refer to Figure 16-6. In response to the situation represented by the figure, we would expect a. new…
A: Monopolistic competitive market:In this market, there are large numbers of buyers and sellers. They…
Q: Suppose two countries, A and B, trade two goods, Good 1 and Good 2. Production of both goods…
A: Heckscher ohlin trade:This theory states that when a country has more labor/capital abundance then…
Q: Consider the case of a manufacturing company which produces and sells brand pens. The selling price…
A: Given information:Total fixed operating cost (FC) = $2 millionTotal fixed financing cost (FCF) =…
Q: A monopolist is facing the market demand, P = = 10 - Q. Which of the following statements is…
A: Monopoly market structure is one under which there is a single seller kn the market and hence the…
Q: What is one of the roles of staff economists who work at each of the Federal Reserve Banks? a.…
A: An economist is an expert who studies the relationship between a society's resources and its output,…
Q: Hotel Nemo is the only under-sea hotel in the nation. The graph shows its demand curve and marginal…
A: A process that business firms undergo to ensure the best output and price levels are achieved in…
Q: At current income tax rates, marginal revenue of taxation is the same for Suzi and Billy. Marginal…
A: ETI is a metric used to quantify how responsive people are to shifts in tax laws affecting their…
Q: 2. A particular country had consumption equal to 675, residential investment was 158, nonresidential…
A: Consumption = 675Residential investment = 158Non-residential investment = 344Change in business…
Q: The Taylor Rule and inflation Suppose the initial inflation rate and inflation target are both 2%,…
A: Inflation is the condition of an increase in a general price level of the economy. To control…
Q: Current Account (CA) = Net Factor Payments (NFP) - Net Exports (NX). Investment (I) - Saving (S). -…
A: The current account balance is part of country's financial inflow and outflow record. The current…
Q: Entrepreneurial activities may be harmful to economic growth in economies that are passing through…
A: ***Since the study table 5 has not been presented, so, subparts 1.2 and 1.3 cannot be solved. If the…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
- 2. Consider a game that game theory people refer to as the “ultimatum game.”We will refer to our two players as the “offerer” and the “decider”. How the gameworks is that the offerer proposes a way to split $1000 between the two players.While this could be done in a variety of ways, we will assume that the offerersonly has two possible proposals: Either a 50-50 split, or she offers the decider$50 and keeps the rest. The decider can either accept or reject the offer. If the offer is accepted, the money is split as proposed. If the offer is rejected, themoney spontaneously combusts and nobody gets anything. a) List the strategies for each player and write an extensive form version of thegame with payouts. b) List all the Nash equilibria of this game. c) Explain which, if any of the Nash equilibrium are not sub-game perfect. d) Write the game out in normal form and find the pure strategy Nashequilibrium. Explain how this matches with your answers to (b) and (c) . Alsoexplain why there…Consider an extensive game. First, a firm from City 1 (Player2) makes Betty (Player 1) a job offer. The offer promises an income y1. ThenBetty decides whether to accept the offer. If the o§er is accepted, the payffsto Betty and the firm are (y1 - x1; 1- y1), where x1 is the house price inCity 1. While Betty is contemplating over this o§er, she receives another joboffer from a firm in City 2. This outside option promises an income of y2and a house price x2. If Betty rejects Player 2ís offer and accepts the outsideoption, the payoffs to the two players are (y2 - x2; 0). If Betty rejects bothoffers, then the payo§s are (0; 0). Assume y1 > x1, y2 > x2, 0 < y1 < 1and y2 - x2 + x1 <=1 .assume that Betty will accept an offer if she isindifferent from accepting and rejecting it. Do the following: (a) Draw thegame tree. (b) Find the subgame perfect equilibrium (SPE) by specifyingstrategies used. (c) What is Bettyís payoff in the SPE? How does this payoffchange respectively with…Consider a setting in which player 1 moves first by choosing among threeactions: a, b, and c. After observing the choice of player 1, player 2 choosesamong two actions: x and y. Consider the following three variants as towhat player 3 can do and what she knows when she moves:a. If player 1 chose a, then player 3 selects among two actions: high andlow. Player 3 knows player 2’s choice when she moves. Write down theextensive form of this setting. (You can ignore payoffs.)b. If player 1 chose a, then player 3 selects among two actions: high andlow. Player 3 does not know player 2’s choice when she moves. Writedown the extensive form of this setting. (You can ignore payoffs.)c. If player 1 chose either a or b, then player 3 selects among two actions: high and low. Player 3 observes the choice of player 2, but not that of player 1. Write down the extensive form of this setting.(You can ignore payoffs.)
- 4. Suppose that there is a negotiation between two players over a painting. Person 1, the seller, has no interest in the painting. On the other hand the painting is worth $100 to the buyer. If the painting is sold at a price in between 0 and 100, both are better off. Player 1 proposes a price p to player 2. Then, after observing player 1's offer, player 2 decides whether to accept it or to reject it. If the offer is rejected both get zero and the game ends. Find the unique SPNE of this game.4. Consider the following game, expressed in dollar terms: R $3,$2 $0,$1 D $1,80 $2,$1 (a) Suppose, first, that this game is played by two egoists, for whom u(x,y)=x. Compute all Nash equilibria in pure strategies. (5 points) (b) Is there an equilibrium in mixed strategies? If there is, compute the probability p with which player I plays U and the probability q with which player II plays L. Also, compute the amount of utility each player gets in the equilibrium. (5 points) (c) Are any of these Nash equilibria trembling-hand perfect? (5 points) (d) Suppose, next, that this game is played by two utilitarians, for whom u(x,y)=x+y. Compute all Nash equilibria in pure and mixed strategies. (5 points)4. Consider the following variant of the Prisoner's Dilemma game: Player 1 is unsure whether Player 2 is "nice" or "selfish", while Player 2 knows Player 1's preferences. Further suppose that Player 1's preferences depend on whether Player 2 is nice or selfish. Specifically, suppose that there is a probability p that Player 2 is "selfish", in which case the game is given as follows. Game with Selfish Player 2 Player1/Player 2 Cooperate (C) Don't Cooperate (D) Cooperate (C) 4, 4 0, 6 Don't Cooperate (D) 6, 0 2, 2 And Player 2 is "nice" with probability 1-p, in which case the following game results. Game with Nice Player 2 Player1/Player 2 Cooperate (C) Don't Cooperate (D) 2, 4 Cooperate (C) 6, 6 Don't Cooperate (D) 4, 0 0, 2 [Note that C = cooperate (with each other) and D = don't cooperate or defect). a) Write the extensive form of this game. How many strategies does each player have in this game? b) For what values of p (if any) is it a Bayes-Nash equilibrium for Player 1 to play D in…
- 8. Two states, A and B, have signed an arms-control agreement. This agreementcommits them to refrain from building certain types of weapons. The agreement is supposed tohold for an indefinite length of time. However, A and B remain potential enemies who wouldprefer to be able to cheat and build more weapons than the other. The payoff table for A (player1, the row player) and B (player 2, the column player) in each period after signing thisagreement is below. a) First assume that each state uses Tit-for-Tat (TFT) as a strategy in this repeated game.The rate of return is r. For what values of r would it be worth it for player A to cheat bybuilding additional weapons just once against TFT? b) For what values of r would it be worth deviating from the agreement forever to buildweapons? c) Convert both values you found in parts a and b to the equivalent discount factor dusing the formula given in lecture and section. d) Use the answers you find to discuss the relationship between d and r:…6. The owner of an antique piece of furniture is looking to sell their good to a known buyer. The seller has a reservation value r whereas the buyer has valuation v > r. Suppose the buyer incurs a one-off transportation cost of t from travelling to the seller to purchase the good. Assume that r, vand t are known to both parties. The game proceeds in two stages: First, the buyer decides whether or not to travel to the seller's location in order to purchase. Second, if they travel then the seller makes a take-it-or-leave-it offer (ultimatum) of price p to the buyer, which the buyer then can either accept or reject. (a) Represent this game in extensive form (b) Find the seller's optimal offer in Stage 2 of this game given that the buyer has already travelled. Is it accepted or rejected? (c) Find a Subgame Perfect Equilibrium of this game. (d) Are there any Nash equilibria which are not subgame perfect? Give an example if one exists. (e) Suppose the seller could offer free delivery at a…10. Player A and Player B are playing a game . First , Player A chooses to either " Keep " or " Pass " . Second , Player B observes A's choice and Player B then chooses to either Keep or Pass . This process continues which creates the sequential game below . Please mark decisions that rational and selfish players will choose at every decision node ( 3 decisions by player A and 3 decisions by player B ) - mark them on the Figure . What is the equilibrium of this game ?
- 2 Consider Anna and Joe, who value a certain good by the same amount v and can choose to either contribute (C) e to get the good or not (N) where v > e> 0. Obtaining the good only requires c from one person. The game is summarized in the payoff table below: Joe V-c,V-c V-c,V v,V-c 0,0 Find a pure strategy equilibrium and a mixed strategy equilibrium. Anna O Z2. Consider the following simultaneous move stage game. In each cell, player l's payoff is shown first. Player 2 L C R T 3, 1 0 ,0 5 , 0 Player 1 M 2, 1 I, 2 3 , 1 В 1, 0 , 1 4, 4 This game is played twice, without discounting of the second stage payoffs. Both players observe the outcome of the first stage prior to making their second stage choices. Determine whether or not (4,4) can be the first stage payoffs from a pure strategy subgame perfect Nash equilibrium. Explain your answer carefully.4. David plays in a game where his strategy (set of possible choices) is denoted by x, which can be any integer between 1 and 7, against Goliath, whose strategy is denoted by y, which can be any integer between 1 and 7. David's and Goliath's utility functions are the same and given by: U(x, y) = (x-2)(y-2). Based on this information, determine whether each of the following statements are true or false. (a) The combination (x, y) = (2, 2) is a Nash equilibrium. (b) This game has no dominant strategy (a choice of integer that gives the highest payoff regardless of what the opponent chooses). (c) This game has only one dominated strategy (a choice of integer that would never be a best response to the opponent's choice of integer).